Written by: Web3 Farmer Frank
Since the end of June, the Crypto industry has seen a wave of 'US stocks on-chain', with Robinhood, Kraken, and others successively launching tokenized versions of US stocks and ETF trading services, even introducing high-leverage contract products targeting these tokens.
From MyStonks, Backed Finance (xStocks) to Robinhood Europe, they all allow users to trade US stock assets on-chain through 'real stock custody + token mapping' - theoretically, users only need a crypto wallet to trade Tesla and Apple stocks at 3 AM without going through a broker or meeting capital thresholds.
However, with the rollout of relevant products, news of pinning, premiums, and decoupling has frequently appeared, revealing the liquidity issues behind them: although users can buy these tokens, they can hardly short efficiently or hedge risks, let alone build complex trading strategies.
Tokenized US stocks are essentially still in the initial stage of 'only being able to buy up'.
1. The liquidity dilemma of 'US stocks ≠ trading assets'
To understand the liquidity dilemma of this wave of 'tokenization of US stocks', one must first penetrate the underlying design logic of the current 'real stock custody + mapping issuance' model.
This model currently mainly divides into two paths, with the core difference being whether it has compliant issuance qualifications.
One type is represented by Backed Finance (xStocks) and MyStonks, which adopts a 'third-party compliant issuance + multi-platform access' model, where MyStonks partners with Fidelity to achieve a 1:1 anchoring of real stocks, while xStocks purchases stocks through Alpaca Securities LLC and holds them.
The other type is the Robinhood-style self-operated closed loop relying on its own brokerage license to complete the entire process from stock purchase to on-chain token issuance.
The commonality of the two paths is that both treat US stock tokens as pure spot holding assets, and what users can do is only buy and hold for appreciation, making them 'dormant assets' lacking an expandable financial functional layer, making it difficult to support an active on-chain trading ecosystem.
Moreover, since each token must actually be backed by a stock, on-chain trading is merely the transfer of token ownership and cannot affect the spot price of US stocks, leading to the natural problem of 'two skins' on-chain and off-chain. Non-scale buying and selling funds can trigger severe price deviations on-chain.
For example, on July 3, the on-chain AMZNX (Amazon stock token) was pushed up to $23,781 by a $500 buy order, with a premium exceeding 100 times its actual stock price. In non-extreme scenarios, most tokens (like AAPLX) also frequently experience pricing deviations and pinning phenomena, becoming ideal scenarios for arbitrageurs and liquidity market-making teams.
Secondly, the functional capabilities of current US stock assets are severely curtailed. Even though some platforms (like MyStonks) attempt to distribute dividends in the form of airdrops, most platforms do not open voting rights and re-staking channels, essentially only providing 'on-chain holding certificates' rather than true trading assets, lacking 'margin attributes'.
For example, after users buy AAPLX, AMZNX, TSLA.M, or CRCL.M, they cannot use them for collateralized lending, nor can they be used as margin to trade other assets, making it even harder to connect with other DeFi protocols (such as using US stock tokens for collateralized lending) to gain further liquidity, resulting in an almost zero asset utilization rate.
Objectively speaking, the failures of projects like Mirror and Synthetix in the previous cycle have confirmed that mere price mapping is far from sufficient. When tokenized US stocks cannot serve as collateral to activate liquidity scenarios and cannot integrate into the trading network of the crypto ecosystem, even the most compliant issuance and the most perfect custody only provide a token shell, with extremely limited practical value in the context of a liquidity shortage.
From this perspective, the current 'tokenization of US stocks' has only achieved moving the price on-chain, still remaining in the initial stage of digital certificates, and has not yet become a true 'financial asset that can be used for trading' to release liquidity, making it difficult to attract a wider range of professional traders and high-frequency capital.
2. Subsidy incentives, or 'arbitrage channels' patched up
Therefore, for tokenized US stocks, it is urgent to deepen their on-chain liquidity, providing holders with more practical application scenarios and holding value to attract more professional funds to enter the market.
Currently, various mainstream solutions discussed in the market, besides the common Web3 model of 'incentives attracting liquidity', are attempting to bridge the 'on-chain - off-chain' arbitrage channels to enhance liquidity depth by optimizing the efficiency of arbitrage paths.
1. Incentive liquidity pools (such as Mirror)
The incentive pool model represented by Mirror Protocol was once the mainstream attempt at tokenized US stocks in the previous cycle. Its logic was to reward users who provided liquidity for trading pairs by issuing platform tokens (like MIR), trying to attract funds into the market through subsidies.
However, this model has a fatal flaw, as it relies on token inflation for incentives, failing to form a sustainable trading ecosystem. After all, the core motivation for users to participate in liquidity mining is to obtain subsidy tokens rather than real trading demand. Once the incentive force weakens, funds will quickly withdraw, leading to a cliff-like drop in liquidity.
More importantly, this model has never considered 'letting US stock tokens generate liquidity on their own' - the US stock tokens deposited by users only serve as part of the trading pair and cannot be used in other scenarios, leaving the assets still dormant.
2. Market maker-led liquidity (such as Backed / xStocks)
Backed Finance (xStocks) and MyStonks adopt a 'market maker-led model', attempting to bridge on-chain - off-chain arbitrage through compliant channels. For example, xStocks purchases corresponding stocks through Interactive Brokers, and when the on-chain token price deviates from the spot, market makers can 'redeem tokens → sell stocks' or 'buy stocks → mint tokens' to smooth the price difference.
However, the cost of implementing this logic is extremely high. The complexity of compliance processes, cross-market settlements, and asset custody often causes the arbitrage window to be consumed by time costs. For example, the redemption process of Interactive Brokers requires T+N settlement, and the asset transfer of custodians often has delays. When the on-chain price experiences a premium, market makers often abandon intervention because they cannot hedge in time.
In this model, US stock tokens are always 'the targets of arbitrage' rather than assets that can actively participate in trading, resulting in the majority of trading pairs on xStocks having low average daily trading volumes and price decoupling becoming commonplace.
This is also the core reason why AMZNX could see a 100-fold premium in July without anyone arbitraging.
3. High-speed off-chain matching + on-chain mapping
The 'off-chain matching + on-chain mapping' model explored by Ondo Finance is actually similar to the PFOF (Payment for Order Flow) model already adopted by MyStonks. By placing the core trading process in a centralized engine and only recording the results on-chain, it theoretically connects to the depth of US stock spot markets.
However, this model has high technical and process thresholds, and the trading times of traditional US stocks need to match the 24/7 trading attributes of on-chain assets.
These three liquidity solutions have their own merits, but whether it is incentive pools, market makers, or off-chain matching, they all assume injecting liquidity with external forces rather than allowing US stock tokens themselves to 'generate' liquidity. Frankly speaking, it is difficult to fill the continuously growing liquidity gap relying solely on on-chain - off-chain arbitrage or incentive subsidies.
Is it possible to break out of the traditional arbitrage framework of 'on-chain - off-chain' and directly construct a trading closed loop in a native on-chain environment?
Three, making US stock tokens 'living assets'
In the traditional US stock market, the reason for abundant liquidity lies not in the spot itself, but in the trading depth built by derivatives such as options and futures - these tools support the three core mechanisms of price discovery, risk management, and financial leverage.
They not only improve capital efficiency but also create long and short games, nonlinear pricing, and diversified strategies, attracting market makers, high-frequency capital, and institutions to continuously enter the market, ultimately forming a positive cycle of 'active trading → deeper market → more users'.
The current market of tokenized US stocks precisely lacks this structural layer. After all, TSLA.M, AMZNX, and other tokens can be held but cannot be 'used'. They cannot be used for collateralized lending or margin trading of other assets, let alone build cross-market strategies.
This is reminiscent of ETH before DeFi Summer. At that time, it could not be borrowed, could not be used as collateral, and could not participate in DeFi until protocols like Aave endowed it with functions such as 'collateralized lending', which released liquidity on a trillion scale. To break through the dilemmas, tokenized US stocks must replicate this logic, making dormant tokens into 'collateralizable, tradable, and combinable living assets'.
If users could short BTC with TSLA.M or bet on ETH trends with AMZNX, then these dormant assets would no longer just be 'token shells', but usable collateral assets, and liquidity would naturally emerge from these real trading demands.
US stock tokenization product service providers are indeed exploring this path. This month, MyStonks has launched the Tesla stock token TSLA.M/BTC index trading pair in collaboration with Fufuture on the Base chain, with the core mechanism being 'coin-based perpetual options', allowing US stock tokens to truly become 'collateral assets that can be used for trading'.
For example, allowing users to use TSLA.M as collateral to participate in BTC/ETH perpetual options trading. It is reported that Fufuture plans to expand support for more than 200 kinds of tokenized US stocks as collateral assets, enabling users holding small-cap US stock tokens to bet on BTC/ETH price movements (such as using CRCL.M as collateral for a BTC long position), injecting real trading demand.
Compared with the centralized contract restrictions of CEX, on-chain options can more freely combine assets into strategies like 'TSLA × BTC' and 'NVDA × ETH'.
When users can use TSLA.M and NVDA.M as collateral to participate in BTC and ETH perpetual options strategies, trading demand will naturally attract market makers, high-frequency traders, and arbitrageurs, forming a positive cycle of 'active trading → increased depth → more users'.
Interestingly, Fufuture's 'coin-based perpetual options' mechanism is not only a trading structure, but also inherently possesses the ability to activate the value of US stock tokens, especially in the current early stage where a deep market has not yet formed. It can be used directly as an over-the-counter market-making and liquidity guiding tool.
The project party can inject tokenized US stocks such as TSLA.M and NVDA.M as initial seed assets into the liquidity pool, building a 'main pool + insurance pool'. On this basis, holders can also deposit their US stock tokens into the liquidity pool, taking on some seller risk and earning the premiums paid by trading users, essentially constructing a new 'coin-based value appreciation path'.
For example, suppose a user has a long-term bullish outlook on Tesla stock and has bought TSLA.M on-chain. In the traditional path, their only choice is:
Continue to hold and wait for appreciation.
Or trade on CEX/DEX to exchange.
But now he can have more ways to play:
Act as a seller to earn premiums: deposit TSLA.M into the liquidity pool, waiting for the price to rise while earning premium income.
Act as a buyer to release liquidity: use TSLA.M as collateral to participate in cross-asset options trading with BTC and ETH, betting on cryptocurrency market volatility.
Combination strategy: part of the holdings provide liquidity while the other part participates in trading, achieving a dual return path and improving asset utilization efficiency.
Under this mechanism, US stock tokens are no longer isolated assets but are truly integrated into the on-chain trading ecosystem, being reused and connecting the complete path of 'asset issuance → liquidity construction → derivative trading closed loop'.
Of course, different paths are still in the exploratory stage, and this article only discusses one possibility.
In conclusion
This round of MyStonks, Backed Finance (xStocks) to Robinhood Europe's real stock custody model means that tokenization of US stocks has completely solved the initial question of 'whether it can be issued'.
But it also indicates that the competition in the new cycle has actually come to the stage of 'whether it can be used' - how to form real trading demand? How to attract strategy building and capital reuse? How to make US stock assets truly come to life on-chain?
This no longer relies on more brokerage firms entering the market, but on the improvement of on-chain product structures - only when users can freely go long and short, build risk combinations, and combine cross-asset positions will 'tokenized US stocks' possess complete financial vitality.
Objectively speaking, the essence of liquidity is not the accumulation of funds but the matching of demand. When blockchain can freely realize 'hedging BTC volatility with TSLA options', the liquidity dilemma of tokenized US stocks may finally be resolved.
